PRESIDENT ALIYEV, DEPUTY SECRETARY DISCUSS

C O N F I D E N T I A L SECTION 01 OF 05 BAKU 000970

SIPDIS

E.O. 12958: DECL: 10/09/2018
TAGS: PGOV PREL ENRG KDEM AJ
SUBJECT: PRESIDENT ALIYEV, DEPUTY SECRETARY DISCUSS
REGIONAL SECURITY, ENERGY AND DEMOCRACY

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Classified By: Ambassador Anne E. Derse, reasons 1.4 (b,d).


1. (C) Summary: President Aliyev, meeting with Deputy
-Secretary Negroponte on October 2, lauded the timely
September visit of Vice President Cheney and re-emphasized
the importance of further enhancing U.S.-Azerbaijan relations
in the aftermath of the Russia-Georgia conflict. President
Aliyev, pointing to instability in the region, called for
greater dialogue with and between "big powers" to clarify
issues and resolve conflicts. The Deputy Secretary thanked
Aliyev for Azerbaijan's up front assistance to Georgia in
August; Aliyev noted that Azerbaijan cannot be involved in a
conflict with Russia. The President noted the absence of a
security umbrella in the Caucasus and called for "more
practical elements in our SECURITY cooperation that can
answer our SECURITY concerns," including sales of U.S.
defensive military equipment, so "Russia and Iran understand
that Azerbaijan is not alone." On energy and the Southern
Corridor, Aliyev complained of Turkey's obstructionist
tactics and a "passive" Europe, and warned that Central Asia
-- Kazakhstan and Turkmenistan -- may be getting cold feet on
further cooperation. The President suggested that the
Southern Corridor project should begin with Azerbaijani gas,
based on additional AGC/AIOC gas that is currently
re-injected. Turkey and Turkmenistan should continue gas
supply discussions; Azerbaijan could then build a Caspian
inter-connector. Natural gas supply talks with Gazprom have
not panned out, as "market price" is not commonly defined.
Aliyev said that the October 15 presidential election will be
held in "a normal atmosphere." The Deputy Secretary pressed
for resolution on the New Embassy Compound. Embassy believes
time is right to launch a concrete, exploratory dialogue at a
senior level to begin a serious discussion on what is needed
and what is possible to strengthen SECURITY cooperation.
Septel reports discussion of Nagorno-Karabakh. End Summary


2. (C) Deputy Secretary of State John D. Negroponte,
accompanied by Ambassador Derse and Deputy Assistant
-Secr etary of State for European Affairs Matthew Bryza, met
with President Aliyev for an hour and half on October 2 in
Baku. Aliyev's International Relations Advisor Novruz
Mammedov joined the meeting. The Deputy Secretary and
President discussed regional developments after the Russian
invasion of Georgia, energy cooperation, US-Azerbaijan
security cooperation and prospects for resolving the Nagorno
Karabakh conflict (septel).

Enhanced SECURITY Cooperation Needed in Insecure Region
-------------- -


3. (C) The Deputy Secretary underscored to President Aliyev
the value the USG attaches to the relationship with
Azerbaijan, especially at this critical time in the history
of the region. President Aliyev agreed, welcoming the Deputy
-Secr etary's and the Vice President's September 3-4 visit as
"very important from all points of view." Aliyev said
US-Azerbaijan relations are developing successfully. The Vice
President's visit took place at the "most critical period"
for Azerbaijan since it gained independence and is an
important reflection of the new level of relations. After
the Russian invasion of Georgia, the regional SECURITY
dimension of US-Azerbaijan relations is more important than
ever before, Aliyev said.


4. (C) Aliyev expressed great concern with the uncertain
regional situation, saying it remains very unclear how
developments will unfold in the wake of the Russian invasion
of Georgia. Much depends on the steps taken by the "big
powers" -- the US, EU, Russia, Iran and Turkey, he said.
Azerbaijan is pleased by the increased attention to the
region, but would prefer to have a better idea about what
will happen in the future. The Deputy Secretary agreed the
situation is not clear, and told Aliyev that the US and
Azerbaijan should look for practical, pragmatic ways to
strengthen relations, including on energy. The USG
understands the hurdles Azerbaijan must overcome to export
its energy resources to world markets, and wants to
cooperate.

Energy: Reticent Central Asia, Obstructionist Turkey and
Passive Europe
--------------


5. (C) Aliyev agreed, saying that US-Azerbaijan cooperation
has been "decisive" in the implementation of strategic energy
projects in the past. Azerbaijan has the resources and, with

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strong US support, joint energy projects have been
successfully implemented, despite obstacles from "north and
south." Continued US support is crucial for future
projects. Implementation of energy projects is more
difficult today because problems are arising from unexpected
quarters, like Turkey. The situation in Georgia also
threatens the viability of the southern route, with war,
explosions and stoppage of transport making the route seem
unsafe. As a result of Russia's actions in Georgia,
Azerbaijan suffered substantial direct economic costs, but it
was worse for Georgia, which lost territory. Azerbaijan
remains concerned with the precedent set in Georgia for
recognition of separatist territories in the Caucasus.
(Comment: in a separate discussion, BP Azerbaijan told USG
interlocutors that there will be "plenty of gas" for
Azerbaijan to sell to Georgia this winter as a result of oil
production problems at the offshore ACG oil mega-field and
related technological prohibitions on re-injecting the gas.
End Comment.)


6. (C) Elaborating on the uncertainties stemming from the
Georgia crisis, Aliyev said that there are now more questions
about the possibility of Central Asian energy resources
reaching the West through Azerbaijan. Kazakhstan has changed
its plans to make major investments in Georgia, and is
showing "less enthusiasm" for the trans-Caspian transport
option. European countries are duplicitous, working with
Russia on South Stream, despite the fact that they are NATO
and EU members. Many, especially EU members themselves, are
"passive."


7. (C) Aliyev cautioned that the future of the Southern
Corridor will be decided in the short term. He suggested
that projects supporting the Corridor can be launched in the
first instance with only Azerbaijan's gas resources, not
relying on Turkmenistan's. "This is best, if we wait for
them they will think they are too important." Most of the
infrastructure is in place, and only two major steps are
needed. First, BP/AIOC must agree to supply more gas to
Azerbaijan, including associated gas that the consortium
currently re-injects in the ACG field to produce more oil.
Under the terms of the PSA, if not re-injected, this gas must
be supplied free of charge to Azerbaijan. It is very
important that BP hear a strong message from the USG to get
in line with the common strategy on the Southern Corridor.
Second, Turkey must be convinced not to demand 8 bcm of gas
from Azerbaijan. If Turkey persists in this demand, "Nabucco
will not happen."


8. (C) Aliyev confirmed to the Deputy Secretary that "our
policy remains absolutely unchanged, we are ready to move
forward." Turkish President Gul, PM Erdogan and Energy
Minister Guler "say yes, yes, yes, -- but nothing happens."
Gazprom offered Azerbaijan a market price, but "their idea of
a market price is different from ours." (COMMENT: FonMin
Mammadyarov later told the Deputy that Azerbaijan's
discussions with Gazprom on gas sales had "failed" because
Gazprom had proposed an unacceptable formula for determining
a so-called "market price." END COMMENT.)

Turkey Still Obstructing
--------------


9. (C) Aliyev said that in his assessment Turkey is now the
most important obstacle. It is difficult for Azerbaijan to
tell Turkey to ask for less gas, or to say it will not sell
to Turkey gas crossing its territory. Turkey argues that it
supports Azerbaijan, while the EU does not, and therefore
does not understand why Azerbaijan wants to sell its gas to
Europe. Aliyev urged that the US, the EU, Azerbaijan and the
companies involved all combine efforts to convince Turkey to
seek less Azerbaijani gas.


10. (C) In this context, Aliyev added, he was pleased that
Guler followed his advice to approach the Turkmen directly to
buy Turkmen gas at the border. "We can build the remaining
part of the pipeline" to deliver the gas (from Turkmenistan
to Azerbaijan). "There will be more volumes for Nabucco and
for Turkey. This is the ideal solution." If this does not
work, then Turkey must be convinced to seek no more than 4
bcm of Azerbaijani gas.

Georgia and Russia: Azerbaijan Protecting Its Interests
--------------


11. (C) The Deputy Secretary thanked Aliyev for Azerbaijan's

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quiet but strong support for Georgia. Aliyev said Azerbaijan
was the first to speak out on behalf of Georgia's territorial
integrity, and was one of the first to privately offer
tangible support. Aliyev said he told leaders in Moscow that
there was no question Azerbaijan would support Georgia's
territorial integrity. Others in the CIS, except Ukraine,
took a different position. Central Asia, Moldova and Armenia
supported Russia. Uzbek President Karimov had reported that
Moscow had asked all CSTO members to support its position,
but they could not because of their own domestic problems.


12. (C) Aliyev said Azerbaijan's position on the crisis is
straightforward, although it is not easy for Azerbaijan to
maintain since it is neighbors to both Russia and Georgia.
Azerbaijan cannot be involved in a confrontation with Russia,
he stated. Azerbaijan has "normal" relations with Russia
which it does not want to damage because "they are based on
Azerbaijan's NATIONAL interests, not concessions...we made
none. They understand that." Russia even accepts
Azerbaijan's energy policy, Aliyev said.


13. (C) "Our relations are settled. We do not want to damage
them, nor upgrade them and become like Kazakhstan, Belarus or
Armenia -- where the Russians can say do this, do that.
They can't tell me what to do and they know that," he said.
But the Georgian war, he worried, "could damage" Azerbaijan's
efforts to maintain normal relations with Russia.

Security Cooperation
--------------


14. (C) The Deputy Secretary noted our strong bilateral
security ties and asked what kinds of cooperation could
further strengthen them. Aliyev agreed that bilateral
security cooperation has been successful for many years, with
MOD and with other GOAJ military elements. MNS cooperation
on counterterrorism and information sharing with its USG
counterpart is also very positive.


15. (C) In the future, however, Aliyev said, "I would like to
see more practical steps to decrease our SECURITY concerns."
Azerbaijan lives in a difficult region with "no NATO
security umbrella. We have no military agreements with
anyone, not even Turkey; they have refused since
independence" to conclude a military agreement. Armenia, on
the other hand, has Russia to guarantee its SECURITY through
the CSTO. Russia will defend Armenia if it is attacked.
Georgia was "under the shield of the West," but it did not
help. Georgia was the country most supported by the West,
even more than Ukraine. Given what happened there, "what can
others expect?" Aliyev asked.


16. (C) The situation in Georgia is particularly dangerous,
Aliyev said, because it shows that "Russia can do anything
and nothing will happen." Georgia was provoked by Russia, and
Russia's response was disproportionate: "What did Poti have
to do with South Ossetia?" Russia occupied Georgia, and "can
stay as long as it wants. They think they can do the same
here, and elsewhere," Aliyev said. Iran is equally
dangerous, because it does not listen to anyone and does not
care about international norms. No one, not the US nor the
Security Council, can influence them -- on the nuclear
program, for example, Aliyev argued. This is a bad
situation which shows Iran that, like Russia, "it can do
anything it wants." Most disconcerting for Azerbaijan, both
Iran and Russia remember that "Azerbaijan was once a part of
them -- throughout our history, we have been divided between
Iran and Russia."


17. (C) Given these factors, "we do not feel 100 percent safe
and protected in this neighborhood," Aliyev said. Since
independence, everything Azerbaijan has achieved to build up
its military and defense capability, it did on its own.
"Turkey did not help." "We do not feel ourselves safe,"
Aliyev repeated. "Our policy of modernizing the army is
natural, we must defend ourselves. And we must buy weapons
from those who are potential threats," like Russia, because
Azerbaijan cannot acquire weapons from the US, Aliyev noted.


18. (C) Azerbaijan is interested only in discussing defensive
equipment, Aliyev underscored. "That is what we really
need." The situation with respect to Caspian delimitation,
for example, remains unclear. Azerbaijan has new indications
that Iran may make a move on the Alov field. Turkmenistan
maintains a claim to the Kyapaz/Serdar field. The GOAJ
recently had to send its Border Guard to ensure Turkmenistan

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removed vessels from Azerbaijan's waters. The situation in
the Caucasus and the Caspian, in short, was fragile before;
after the Russian invasion of Georgia, it is worse. "We
would like to see in our SECURITY cooperation more practical
elements that can answer our concerns," Aliyev repeated.


19. (C) Aliyev stated that Azerbaijan's good history of
security cooperation with the US supports strengthened
security ties. "Our cooperation on SECURITY issues has been
efficient, practical, and broad, though not public. If we
maintain such relations and obtain access to equipment it
will contribute to stability in the region, because everyone
will know that Azerbaijan can defend itself for longer than
it can today."

Iran and Islam
--------------


20. (C) Aliyev told the Deputy Secretary that Azerbaijan's
relations with Iran are satisfactory, although Azerbaijan
does not understand how Iran can support Armenia while
positioning themselves as defenders of Islam. Had Iran closed
its border with Armenia, an NK solution would have been
hastened. Azerbaijan shares a long border with Iran and
while Azerbaijan is used to handling relations with Iran,
Azerbaijan is not comfortable with this neighbor. There are
25 million ethnic Azeris in Iran, and it is an Islamic state.
In the North, there is growing Wahhabism coming from
Dagestan and creating serious problems. A gang "from Russia"
was responsible for the recent bombing of the Abu Bakr mosque.


21. (C) Azerbaijan's growing prosperity and strength will
help it resist pressure from north and south, but "more
visible signs of strong relations with the US and Europe,"
are important. "It should be clear that Azerbaijan is a
country with solid ties to the West. That the West has
interests here. It is very important for us, that Russia and
Iran understand that Azerbaijan is not alone." Aliyev
deplored that Western European leaders "never" visit
Azerbaijan. "They do not notice us," he said.

Iraq and Afghanistan
--------------


22. (C) The Deputy Secretary thanked Azerbaijan for its
support in Iraq, and explained that the Iraqi government's
recent decision to reduce the numbers of coalition forces in
Iraq is the result of Iraq's success in building up its own
defense capabilities. Aliyev replied that he had always said
Azerbaijan's peacekeepers would stay in Iraq as long as they
were needed. Azerbaijan is planning to double the number of
its forces in Afghanistan, and with respect to those leaving
Iraq "we can talk, if more are needed in Afghanistan."
Azerbaijan will also offer police and military training,
engineers, doctors, after the recent visit of a high level
GOAJ delegation to Afghanistan to discuss cooperation.
Azerbaijan's cooperation in peacekeeping will continue,
Aliyev confirmed.

Democratic Reform
--------------


23. (C) The Deputy Secretary asked Aliyev if he expected
October 15 Presidential elections to be peaceful. Aliyev
expressed his hope that they would be, but noted that
elections in 2003 and 2005 had not been peaceful. In 2003,
protesters took the main square and in 2005, protestors had
tried to do the same, unsuccessfully. The atmosphere today is
calmer, candidates are conducting their campaigns, with
access to public TV and radio and meetings in the regions.
Some parties are boycotting the elections, but that is their
choice. The COUNCIL of Europe had assessed Azerbaijan's new
election code as providing the basis for a free and fair
election. The decision to boycott by the "veteran
opposition" was a step "not to lose face" as they have lost
one election after the other, and support, over the past
fifteen years.


24. (C) The Deputy Secretary noted the importance of the
ongoing bilateral dialogue on human rights and democracy.
Aliyev replied that the dialogue is "very good, we support
it, there is lots to be done. We are far from considering
ourselves perfect with respect to democratic development, but
we are moving in the right direction." Aliyev said
Azerbaijan is sometimes accused with respect to media
freedom, but such reports are "not true." The media is free,

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with many newspapers and growing internet use, including
expanding internet use in schools, with one computer for
every 29 students. Azerbaijan is a leading country for
information technology. Organizations like Reporters without
Borders and Human Rights Watch are "not objective," although
Human Rights Watch also criticizes western countries, Aliyev
acknowledged.


25. (C) Aliyev argued that when people are poor they do not
think about politics. Azerbaijan has reduced poverty from 49
to 16 percent, and it is "hard to find poor people" in
Azerbaijan today. The political system is very new;
Azerbaijan never had a political system before independence.
This year's elections should be held in a normal atmosphere.

New Embassy Compound
--------------


26. (C) The Deputy Secretary expressed the USG's strong
interest in moving ahead with constructing a new Embassy
compound, which would be a potent symbol of the strength of
our relations and USG engagement here. Aliyev agreed, saying
he had offered a site for the new Embassy and wants to see it
constructed. There are "some legal procedures" to be
completed, but he had instructed his STAFF to accept the
latest USG proposal to finalize the deal, if it can be done.

Comment
--------------


27. (C) President Aliyev altered his regional campaign
schedule in order to return to Baku and meet the Deputy
-Secretary. Aliyev used the occasion, which was an important
follow up to the early September visit of Vice President
Cheney, to deliver important messages on Nagorno-Karabakh
(septel) and regional security, with a familiar theme --
Azerbaijan is a staunch US partner, but feels vulnerable in
what it sees as an unstable and insecure neighborhood.
President Aliyev is welcoming US ideas on more intense
engagement on SECURITY cooperation, as it needs greater
defense capability. Azerbaijan wants to see more "practical"
elements in SECURITY cooperation, including arms sales.
Azerbaijan's neighbors, the President emphasizes, need to
understand that the West has interests here and that
Azerbaijan is not alone. President Aliyev's comments on
Central Asia's reticence in terms of energy cooperation are
disheartening, but his commitment to the Southern Corridor --
and his proposal to move forward on gas supply regardless of
Turkmenistan's participation -- is encouraging. Turkey and
transit remain the keys.


28. (C) Consistent with our interest in bolstering a key
partner located on not only Russia's, but also Iran's,
periphery, and consistent with our interest in ensuring
Azerbaijan remains a stabilizing force and supporter of key
US interests in a volatile region, we believe it is more
important than ever to begin a serious discussion on what is
needed and what is possible to strengthen SECURITY
cooperation. Launching a concrete, exploratory dialogue at a
senior level as soon as possible after Azerbaijan's October
15 elections (which Aliyev is widely expected to win) and
before the end of the administration is key to shoring up
Azerbaijan's independence of action and Western orientation
in the face of new regional uncertainty and pressure.


29. (U) DepSec STAFF has cleared this cable.
DERSE